The consumer watchdog is warning businesses they will face big penalties if they fail to pass on the cost savings due to the repeal of the carbon tax.

The repeal paves the way for the Australian Competition and Consumer Commission (ACCC) to use its new powers to take action against any business that does not pass on savings.

Businesses on notice are those that supply regulated goods such as electricity, natural gas, synthetic greenhouse gases (such as refrigerant gases) or synthetic greenhouse gas equipment (such as refrigerators and air conditioners).

The Energy Supply Association of Australia says most energy companies should have already provided a significant amount of information about their carbon costs to the ACCC.

Energy retailers have told the ABC the savings will be passed onto households and backdated to July 1.

ACCC chairman Rod Sims says, by law, the savings must now be passed on.

"If they fail to do so, the ACCC will take enforcement action against them and seek serious penalties from the courts," Mr Sims said.

Breaching the carbon tax price reduction rules can attract a penalty of up to $1.1 million per contravention for corporations, or $220,000 per contravention for an individual.

Mr Sims says suppliers in the key areas of electricity, natural gas or a bulk importer of synthetic greenhouse gas that engage in price exploitation will also be subject to a penalty equal to 250 per cent of the cost savings that were not passed through.

"The ACCC will be keeping a close eye on prices to make sure that all cost savings go to consumers," Mr Sims said.

Businesses that sell electricity and natural gas, produce electricity and sell into wholesale markets or bulk import synthetic greenhouse gas will be required to provide evidence to the ACCC to show that they have passed on the cost savings.

"These businesses will be required to explain how the carbon tax repeal affected their input costs and how they are passing through the savings," Mr Sims said.

"These powers are in addition to the ACCC's existing investigative powers and will ensure that businesses engaging in price exploitation are identified and enforcement action is taken against them.

"If suppliers of regulated goods put their prices up due to the carbon tax, these prices must similarly come down on repeal.

"If these businesses don't do that, they will be looking at serious court action from the ACCC and significant monetary penalties."

The ACCC says it has the capacity to address any misleading representations about the impact of the repeal.

If a consumer or a business is concerned that one of their suppliers is engaging in price exploitation, they should contact the supplier to obtain information on the effect of the carbon tax repeal on the supplier's prices.

They can contact the ACCC Infocentre on 1300 302 502 or via the website www.accc.gov.au.